New Brunswickers owed the 'straight goods' on shale gas
A series of special op-eds written on the shale gas industry
David Plante is the vice-president of the Canadian Manufacturers and Exporters in New Brunswick.
He is also the manager of the New Brunswick Mining Association.
The Canadian Manufacturers and Exporters and the New Brunswick Mining Assocation are organizations that represent the industry.
The CME's mandate is to promote the competitiveness of Canadian manufacturers and to help foster greater success of goods and services produced by Canadian companies around the world.
The New Brunswick Mining Association is a private association of provincial mineral and metal producers.
Resource-based industries, including oil and gas and mining, are an integral part of New Brunswick’s heritage, culture and economy.
Over the years, there have been many public debates about the development and utilization of our natural resources. Separating fact from fiction can be a real challenge, particularly in today’s world of instant and unlimited access to information.
This truism has been clearly demonstrated in the debate now taking place over the exploration for and possible development of shale gas.
Some perspective is also required for a constructive dialogue on this issue. In this regard, it is important to note that the oil and gas industry is not new to New Brunswick.
Indeed, one of the first gas wells in North America was struck near Stoney Creek in 1859, and the people of Moncton were using gas in the early 1900s.
More recently, gas was discovered in the McCully field near Sussex in 2000. Since then, about 40 wells have been drilled in that field, a number of which were fracked. It is understood there were no significant incidents related to those activities.
Of course, the presence of shale gas could result in significantly greater activity, with possibly hundreds or even thousands of wells being drilled. It can’t be emphasized enough, though, that development of this resource is still in the very early stages.
A rule of thumb in the mineral industry is that only one of 1,000 occurrences eventually comes into commercial production. The probability is higher for the oil and gas sector (e.g. one in 10), but the development shale gas in New Brunswick is still far from certain.
This isn’t to say that planning shouldn’t be done now to deal with potential issues and ensure the sustainable development of this resource. The purpose of this commentary is not to exhaustively discuss these issues. (Indeed, that is the raison d’etre of public outreach sessions being conducted by industry, environmental groups and the government’s Natural Gas Group.)
Given the rhetoric surrounding shale gas, however, we felt that it was important to at least address a few of the misconceptions.
The footprint of natural gas development on the landscape is minascule. As a point of reference, the mineral industry has disturbed only 0.03 per cent of Canada’s land mass. This land must be reclaimed when it is no longer used for industrial purposes.
The same requirements exist for the oil and gas sector. With current restrictions on land use, it is also very unlikely that such developments would be sited near residential areas.
Thus, the potential for exposure to any emissions from such developments, should they occur, is highly unlikely. Given the geology in an area, though, there may be a need to conduct exploration on private land.
However, this can only be done with the consent of the landowner, and there are legal requirements to provide compensation, should any damages occur.
Impact on water
The public’s greatest concern seems to be about possible impacts of fracking on our water resources. In this regard, an aquifer could be contaminated from incorrectly designed or installed drill casings or from water flowing back up a well.
Engineering controls are instituted to minimize this possibility. As in any industrial facility (or any home for that matter), accidents can happen.
Ongoing monitoring and inspection is required to mitigate any potential adverse impacts. And security bonds must now be established to protect property owners against potential damages from an accident.
The actual fracking of the shale takes place far below the water table.
It has been suggested that wells in three areas of Pennsylvania may have been contaminated with methane by migration of fluids back up pre-existing bore holes.
In these areas, however, numerous uncased, uncapped wells were drilled over the last 150 years that can’t be identified. This is not the situation in New Brunswick.
The large majority of fluid used to frack a shale gas well (up to 99.5 per cent or more) is water. The volume required, though, is actually less than that used in a number of industrial facilities. (As an order of magnitude, the water required to frack a well is equivalent to about a day’s use.)
The water used at the four major shale plays in the United States is less than one per cent of total usage in each state. Any other chemical additives used in the process must be disclosed prior to fracking a well.
Social licence required
The mineral industry has made great strides in sustainable development over the past two decades and there is now a clear recognition that a ‘social licence’ to operate is required.
In New Brunswick, we are home to world class operations that have not only adopted environmental best practices, but have been leaders in developing state-of-the-art techniques.
From our observations, it is believed the majority of operators in the oil and gas sector have adopted the same mind set. Of course, bad actors can emerge in any setting. Hence, an effective regulatory regime, complete with qualified field inspectors, is a pre-requisite to development of shale gas resources.
Government has committed to adopt a model regulatory framework for exploration and development of shale gas, with the necessary monitoring and enforcement mechanisms to protect the environment and residents of New Brunswick.
It might be argued that elements of the regulatory regime being adopted in this province far exceed requirements in other jurisdictions.
At the end of the day, it must be recognized that there are risks inherent in any activity we undertake. It is essential that regulatory requirements reflect, and help manage, the risks associated with those activities.
Should an attempt be made to virtually eliminate all risk, the consequence will be that no economic activity takes place.
Rich, diverse mineral endowment
New Brunswick has been blessed with a rich and diverse mineral endowment.
We have been mining in this province for more than 350 years, and today we have the greatest value of mineral production per square kilometer of any jurisdiction in Canada.
Finds of the kind made in Bathurst and Sussex a half and a quarter century ago can support a region’s economy for decades. It is believed that shale gas holds the same type of potential for New Brunswick.
It has been estimated that the province can reap up to $225 million in royalties by tapping into shale gas. As in other "petroleum provinces," this revenue stream can be a real "game changer."
New Brunswickers are owed the straight goods on the potential benefits and costs of shale gas development.
We also owe it to ourselves to make decisions on this issue based on sound science and not supposition or fear.
There is much at stake here, not only in terms of the environment but in terms of our standard of living. The ramifications are huge.
This is not just about the potential loss of an opportunity to develop a source of cleaner burning fossil fuel. This is about creating a model for future development of our natural resources.
The requirement for responsible, sustainable development is a given. The need for a timely, certain regulatory regime and an attractive investment climate is a reality.